Allexer Namundjembo
The Namibia Financial Institutions Supervisory Authority (Namfisa) has acknowledged the Supreme Court judgement in the long-running Prowealth Asset Managers (PAM) matter.
It said the case arises from events that occurred nearly two decades ago, at a time when the regulatory environment was far less developed.
“The PAM matter relates to a period when Namfisa’s regulatory and supervisory framework was still evolving. While we acknowledge that there were weaknesses at the time, we respect the findings of the Supreme Court,” said Victoria Raimond, manager for corporate communications and consumer education at Namfisa, in a press statement issued on Thursday.
She said the authority has since undergone major changes to strengthen supervision and consumer protection in the non-bank financial sector.
“Today, Namfisa operates under a modern, robust, and proactive regulatory framework that aligns with international best practice and is designed to safeguard consumers and maintain trust in Namibia’s financial system,” Raimond said.
The PAM case dates back to the early 2000s, shortly after the establishment of Namfisa under the Namfisa Act of 2001.
PAM was registered as an asset management firm in August 2003 and operated during a period when oversight of non-bank financial institutions was still developing, with limited supervisory tools, less frequent reporting, and evolving enforcement systems.
The collapse of the Prowealth group in December 2008, following the death of its founder Riaan Potgieter, exposed alleged financial irregularities.
Investors and the company’s liquidator later claimed that large sums of investor funds had been misappropriated over several years.
These claims sparked civil litigation against several parties, including Namfisa and PAM’s auditors.
The plaintiffs argued that weaknesses in supervision and auditing contributed to the losses suffered by investors.
Court proceedings began in 2012, marking the start of one of Namibia’s longest-running financial disputes.
In 2014, the High Court dismissed parts of the claim on technical grounds.
That decision was overturned by the Supreme Court in 2016, which ruled that the matter should proceed on its merits.
This opened the way for closer examination of issues such as regulatory responsibility, negligence and causation.
Over time, the case has raised broader questions about the extent to which a financial regulator can be held civilly liable for investor losses linked to misconduct by regulated entities, especially where such conduct occurred under an earlier and less developed regulatory framework.
Namfisa said major reforms have been introduced since the period in which the PAM events occurred. Entry into the non-bank financial sector is now subject to strict vetting.
This includes fit-and-proper assessments, financial soundness checks and governance evaluations to ensure that only institutions meeting required standards of integrity, competence and solvency are licensed.
The Stock Exchanges Control Act of 1985 introduced key regulatory changes in 2016 to address the gaps highlighted during the PAM litigation, according to Raimond.
“Investment managers are now required to submit audited annual financial statements within three months of year-end, provide annual compliance reports, and are subject to ongoing information requests by the Registrar of Stock Exchanges. These measures allow for continuous oversight and early detection of irregularities,” she said.
She said financial soundness requirements have also been tightened. Licensed entities must maintain a minimum capital requirement of N$250,000, ensure that assets exceed liabilities at all times, and hold enough current assets to cover current liabilities.
“These prudential requirements ensure that only financially stable institutions operate within the non-bank financial sector,” Raimond said.
Namfisa said it has also strengthened accountability and has in recent years used its powers to deregister entities that fail to comply with regulatory requirements or pose risks to consumers and the financial system.
“This proactive approach ensures that the market remains safe, credible, and trustworthy,” Raimond said.
Institutional strengthening has been a focus over the past decade. Namfisa said it has invested in skilled supervisory staff, modernised regulatory systems and improved internal controls and supervisory methods in line with international standards.
Raimond said this includes greater emphasis on transparency, public awareness, market conduct supervision and the operation of a dedicated consumer complaints and education function.
